Gone in 60 Days: Citi and Bank of America Won't Live to See May?

The following article claims that both banks will vanish until May from the stock screens since as banks they need to carry on their business. The point is that something might trigger a sellout but the ongoing momentum does the necessary by itself. The real driver is as I stated a few times that the valuation of the market needs to be adjusted to a sustainable level which is around 500 for real value and 600 for fair value. The real value came always at the ultimate low as things have tp play out still and the real low may be in 1-2 years and rather around 200 SPX as earnings will drop much further the next years. All we get now is a temporary low of the current wave as we entered another capitulation wave and the voices who were bullish in November have been shut down and as a real bottom (even temporary) as we make new lows soon we might hear almost no bullish calls at all. We have 3 things playing out here first of all is the disappointment about the Obama admin. as they made phony promises but did not deliver as they made people believe they would. the 800 bil stimulus package is far from being anything like that its rather more an aid package for the underprivileged ones - that's good for them but does not create jobs (4 mil. jobs as Obama promised is ticked off by the market). Second of all we have calls for the big banks to be wiped out ( rather the stockholders) as the banks are against the calls of the CEO's bankrupt - on top are some calls from Roubini that a sovereign will go bust soon (he claims Ireland or Greece) - over time many sovereigns will go bust. Finally Hedge Funds got their withdrawal deadline last week and need to liquidate further as we can clearly observe. We got the mix for a little panic and here we go but we are not done yet as another 10% are likely within 3 weeks..

Excerpt

Citigroup (C) and Bank of America (BAC) won't live to see May. The government will take them over within the next 60 days. The announcement may come as soon as tomorrow evening.

If there's one thing our readers know, it's that ChartingStocks.net has made some bold calls in the past which seemed controversial and highly unlikely at the time. Our January 2007 post warned of the coming stock market crash at a time when the market was making new all time highs. In February 2007 we warned about the breakdown of the brokerage stocks and singled out Bear Stearns (Trading at $160), Merrill Lynch (Trading at $87), and Morgan Stanley (Trading at 78). In September 2007, we warned of a selloff in the coming weeks. The market peak and decline began 4 weeks later.

We're going to make another bold prediction. Bank of America and Citigroup won't live to see May. The two banks will be nationalized in the coming weeks, and we think that the announcement can come as soon as tomorrow evening (Friday evenings are when major bank announcements and failures occur).

The US government has already committed half a trillion dollars to these two firms which is more than 10 times the amount it would cost to buy and control both companies. The market doesn't believe that $500 billion is enough to save these companies.
All the kings horses and all the kings men can't put humpty dumpty back together again.

Today both banks made fresh new lows with Citi closing at $2.51 and Bank of America closing at $3.93. The 1 year charts below show the short term price movements. You should understand that when a bank stock's chart looks like this, even a HEALTHY bank would be in trouble. Nobody wants their deposits tied up in a company that trades at $2. The outflows of deposits from Bank of America and Citi must be catastrophic.

The stock charts and potential run on these banks are not the only basis for our opinion. The media can be an excellent investing tool if you know how to decipher the news. We don't watch the news for the information, we watch if for THE LIE.

We play close attention to air time given to so-called "Experts" and the way the media spins the information. If you know that our mainstream media is simply a licensed PR firm for the US government, you can get vital information which you can use in trading. Always ask yourself - What opinion are they trying to insert? What are they selling? What's the underlying agenda?

The government uses the media to float policy before the public so it can digest it. By the time the government takes the action, most people not only anticipate it but are even asking for it.

In the past two weeks there have been countless debates, op-ed's, and even opinion polls regarding bank nationalization. The popular opinion among the establishments "Experts" is that nationalizing the banks may be the only way. Even Alan Greenspan, a LIBERTARIAN, recently said that it would be a good idea. It's coming folks! It's what the establishment wants. (Sidenote: They may not actually use the word nationalization, even if thats exactly what they do)

Below is the long term view of BAC and C. These stocks have made multi decade lows. Other stock charts which looked similar to these were Fannie Mae, Freddie Mac, Lehman, Bear Stearns.

Excerpt 2

Dodd Says Short-Term Bank Takeovers May Be Necessary

Feb. 20 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd said banks may have to be nationalized for “a short time” to help lenders including Citigroup Inc. and Bank of America Corp. survive the worst economic slump in 75 years.

“I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd said on Bloomberg Television’s “Political Capital with Al Hunt” to be broadcast later today. “I’m concerned that we may end up having to do that, at least for a short time.”